Payment of pre-deposit for filing appeal through cash ledger only
by ReinHeads Team | Oct 13, 2021
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Payment of pre-deposit for filing appeal through cash ledger only
- Jyoti Construction (‘the Petitioner’) is a partnership firm engaged in the business of civil, electrical and mechanical work
- A demand was raised by Deputy Commissioner of CT & GST, Odisha for the period of March, April, May, June and July, 2020, which resulted in extra demand for GST including of interest
- The Petitioner filed an appeal before the Appellate Authority against the demand raised by the Deputy Commissioner
- Accordingly, the Petitioner made the payment of pre-deposit (equivalent to 10% of the disputed amount of tax arising from the order) by debiting the Electronic Credit Ledger (‘ECRL’)
- However, as per the Appellate Authority, the liability of pre-deposit could be discharged only by debiting the Electronic Cash Ledger (‘ECL’)
- The Appellate Authority rejected the appeal by holding the same as defective since the Petitioner made the payment of pre-deposit by debiting ECRL and not ECL
- Accordingly, the Petitioner filed the writ petition against the order of the Appellate Authority
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| Issue before the High Court |
- Whether the liability of pre-deposit could be discharged by debiting the ECL as provided under Section 49(3) read with Rule 85(4) of the CGST Rules or by debiting the ECRL as well?
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| Discussion & Ruling |
The Hon’ble High Court of Odisha held that payment of pre-deposit at the time of filing of appeal under Section 107(6) of the CGST Act could not be made by debiting the ECRL and the same should be paid through debiting ECL only on account of following key reasons:
- “Output Tax” as defined under Section 2(82) of CGST Act could not be equated to the pre-deposit required to be made in terms of Section 107(6) of the CGST Act
- Section 41(2) of the CGST Act restricts utilization of ITC only toward self-assessed output tax
- Section 107 (6) of the CGST Act is not merely a machinery provision
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